IslamicFinance.de

While the sustained demand for sukuk is widely acknowledged, challenges relating to restrictive legal regimes, standardization and default mechanics could potentially impede its anticipated growth. Latham & Watkins partner Nomaan Raja discusses the challenges the developing global sukuk market faces. The majority of Shari’ah scholars agree that a guiding set of principles should be developed for future sukuk issuances. Increasing standardization stabilizes the market and safeguards investor confidence. The development of a mature market requires that sukuk investors understand their rights and remedies in default scenarios. The AAOIFI is seemingly encouraging a move towards asset-backed structures, in which the investors have actual recourse to the assets in the event of a default.